U.S. Department of Health and Human Services: Goal of 50% Medicare Provider Payments Linked to Alternate Payment Models by 2018

In this January 2015 blog posting, Health and Human Services Secretary Sylvia Mathews Burwell announced departmental goals of linking 30% of Medicare provider payments to alternate payment models by 2016, and to 50% by 2018.  A secondary set of goals are to link 85% of Medicare fee-for-service provider payments more generally to quality or value by 2016, and to link 90% by 2018.  The Secretary uses the formulation of the “triple aim” that she favors, “achieving better care, smarter spending, healthier people” as the overall departmental goal.  Secretary Burwell also announced the creation of a Health Care Payment Learning & Action Network at the Center for Medicare and Medicaid Innovation to support the achievement of these goals.

These goals will be supported by Congress’ repeal of the Sustainable Growth Rate formula for Medicare payments in April, which includes a transition from annual 0.5% provider rate increases to a merit-based incentive payment system beginning in 2019.  The merit-based incentive payment system combines requirements for the current Physician Quality Reporting System (PQRS), Medicare EHR Incentive Program, and Physician Value-Based Modifier.

Additional bonus payments would be available beginning in 2019 to providers who participate in alternative payment models, including shared savings through accountable care organizations and patient-centered medical homes.  Beginning in 2026, providers participating in alternate payment models may receive annual increases of up to 0.75% while those only participating in the merit-based incentive payment systems may receive annual increases of up to 0.25%.  To qualify for the maximum annual increases, providers would have to demonstrate that an increasing percentage of their Medicare revenue, or of all-payer revenue, is calculated through alternative payment methods (up to 75% by 2023).  While the percentages under the Medicare Access and CHIP Reauthorization Act of 2015 do not align precisely with the HHS departmental goals for Medicare as a payer, they continue to move the nation away from fee-for-service payments and towards value-based payments.

All these policy developments will increase pressure on Medicaid and commercial health insurance payers to align their provider payments away from fee-for-service models to value-based and alternative payment models towards the triple aim.

This entry was posted in Health Care Reform, Health Care Reform: Payment Reform. Bookmark the permalink.

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